European Central Bank President Christine Lagarde emphasized the need for “truly European” banks on Wednesday, advocating for a banking sector that transcends national borders to increase lending capacity and economic resilience. Her comments come amid Germany’s Commerzbank seeking to fend off a potential takeover bid from Italy’s UniCredit.
Lagarde called for reducing the regulatory barriers that currently restrict capital and liquidity flow within the Eurozone. “Reducing the ring-fencing of capital and liquidity along national lines would allow funds to flow freely within banking groups and facilitate lending across borders,” she said, although she did not mention specific banks.
According to Lagarde, a more integrated European banking sector could better diversify risks across industries and regions, enhancing financial stability. “Truly European banks have the capacity to lend more at scale and handle cross-border financing projects that smaller, locally focused banks cannot,” she added.
Her statements underscore the ECB’s ongoing push for financial integration within the Eurozone, aiming to support larger cross-border banks that can strengthen Europe’s economy by financing regional projects more effectively.
